What is a MBO or MBI?
When owners reach a decision to sell their business, often the first assumption is to market their business for sale to a third party buyer. However, it may be the case that there is an alternative option within the existing management team.
A management buy-out (or MBO) is a common way to sell the ownership of a business to an incumbent management team. For owners, this can provide peace of mind in ensuring a smooth transition for both staff and customers which is usually a high priority when entrepreneurs seek to retire. It often includes the exiting owner remaining as an investor in the new business.
For the management team, the MBO route will also provide a platform to take ownership of a company they know thoroughly, alleviating the requirement to assume the risks which are usually taken on when acquiring a business. As a result, the level of legal due diligence needed is reduced from that required on a standard acquisition of a company.
What our corporate law solicitors do
We advise management teams if they are contemplating buying out a business owner or buying into a business. We will work with you and your other professional advisers to help you determine the best legal structure for the deal.
We will then negotiate and prepare bespoke legal documentation to give effect to what has been agreed.
One of the difficulties can be agreeing the warranty cover between the sellers and the management team on the basis that the division of responsibility in respect of the various areas of the business can make it hard to determine what the appropriate cover should be. Often existing owners don’t expect to give any warranties to a management team who have extensive knowledge of the business already. We can help find the right balance between the owners and the management team.
Why appoint corporate legal advisers?
It can be very difficult for a management team to continue running the business day-to-day while also managing of all the required legal and financial steps needed in a management buy-out or buy-in. The appointment of legal advisers helps to ensure that the day-to-day running of the business does not suffer, especially as the transaction can be very time consuming.
How our corporate law team works
We incorporate strong teamwork and practical working practices to ensure we turn work around in a timely and efficient manner.
Our extensive experience in dealing with all parties in such transactions, acting for management teams, sellers and funders, ensures a target-focused approach.
What is a MBO or MBI?
When owners reach a decision to sell their business, often the first assumption is to market their business for sale to a third party buyer. However, it may be the case that there is an alternative option within the existing management team.
A management buy-out (or MBO) is a common way to sell the ownership of a business to an incumbent management team. For owners, this can provide peace of mind in ensuring a smooth transition for both staff and customers which is usually a high priority when entrepreneurs seek to retire. It often includes the exiting owner remaining as an investor in the new business.
For the management team, the MBO route will also provide a platform to take ownership of a company they know thoroughly, alleviating the requirement to assume the risks which are usually taken on when acquiring a business. As a result, the level of legal due diligence needed is reduced from that required on a standard acquisition of a company.
What our corporate law solicitors do
We advise management teams if they are contemplating buying out a business owner or buying into a business. We will work with you and your other professional advisers to help you determine the best legal structure for the deal.
We will then negotiate and prepare bespoke legal documentation to give effect to what has been agreed.
One of the difficulties can be agreeing the warranty cover between the sellers and the management team on the basis that the division of responsibility in respect of the various areas of the business can make it hard to determine what the appropriate cover should be. Often existing owners don’t expect to give any warranties to a management team who have extensive knowledge of the business already. We can help find the right balance between the owners and the management team.
Why appoint corporate legal advisers?
It can be very difficult for a management team to continue running the business day-to-day while also managing of all the required legal and financial steps needed in a management buy-out or buy-in. The appointment of legal advisers helps to ensure that the day-to-day running of the business does not suffer, especially as the transaction can be very time consuming.
How our corporate law team works
We incorporate strong teamwork and practical working practices to ensure we turn work around in a timely and efficient manner.
Our extensive experience in dealing with all parties in such transactions, acting for management teams, sellers and funders, ensures a target-focused approach.
